Commodity Futures Trading Commission (CFTC) commissioner Caroline Pham has claimed the regulator has “piggybacked” on a Securities and Exchange Commission (SEC) enforcement action in order to obtain a US$3 million settlement.
Referring to the CFTC case against TD Bank and Cowen, commissioner Pham has dissented, pointing to the fact that no CFTC registered associate person — an individual who solicits orders, customers or customer funds on behalf of an introducing broker (IB) — has violated CFTC recordkeeping requirements. Pham noted that the CFTC only reviewed evidence provided to the SEC and suggested that such enforcement could limit market access.
“I am unable to support an enforcement action that does not have any evidence that the alleged violations actually occurred. Therefore, I must dissent,” Pham wrote. “This case appears to be the CFTC’s piggybacking off the SEC’s investigation to misuse the power of the US government to obtain a $3 million settlement — all without any evidence of a CFTC violation.”
Pham suggested that because two of the firms outlined in the case have deregistered with the CFTC, the regulator may be creating an environment in which firms decide not to engage in business activity subject to CFTC oversight, and that firms would rather not participate in US markets than deal with the CFTC.
“The CFTC should be promoting greater access to markets—not limiting access. In the last several years, customers and clients now have less choice of market participants to conduct trading because of the de-registration of IBs. Fewer market participants leads to less liquidity and less efficient markets,” Pham added.
